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NOTE 1 SIGNIFICANT ACCOUNTING POLICIES
(continued)
Provident Fund:
Provident Fund for certain eligible employees is managed by the Company through the
‘Atul Products Ltd – Ankleshwar Division Employees Provident Fund Trust’ in line with Provident
Fund and Miscellaneous Provisions Act, 1952. The plan guarantees interest at the rate notified by
the Provident Fund authorities. The contributions by the employer and employees together with the
interest accumulated thereon are payable to the employees at the time of their retirement or separation
from the Company, whichever is earlier. The benefits vest immediately on rendering of the services by
the employee. Any shortfall in the value of assets over the Defined Benefit Obligation is recognised as
a liability, with a corresponding charge to the Consolidated Statement of Profit and Loss.
c) Short-term leave encashment:
Short-term leave encashment is provided at undiscounted amount during the accounting period
based on service rendered by employees.
d) Voluntary Retirement Scheme:
Compensation payable under the Voluntary Retirement Scheme is being charged to the Consolidated
Statement of Profit and Loss in the year of settlement.
4.15 Taxation:
a) Income tax expense comprises current tax and deferred tax charge or credit. Provision for current tax is
made on the basis of the assessable income at the tax rate applicable to the relevant assessment year.
b) MAT credit is recognised as an asset only when and to the extent there is convincing evidence that
the Company will pay normal income tax within the specified period.
c) Deferred tax asset and deferred tax liability are calculated by applying tax rate and tax laws that
have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets on
account of timing differences are recognised, only to the extent there is a reasonable certainty of its
realisation. Deferred tax assets are reviewed at each Balance Sheet date to reassure realisation.
d) Deferred tax assets, representing unabsorbed depreciation or carried forward losses are recognised,
if and only if there is virtual certainty supported by convincing evidence that there will be adequate
future taxable income against which such deferred tax assets can be realised.
4.16 Government grants:
a) Grants are recognised when there is reasonable assurance that the same will be received.
b) Revenue grants for expenses incurred are reduced from the respective expenses.
c) Capital grants relating to specific fixed assets are reduced from the cost of the respective fixed assets.
d) Grants in the nature of promoters’ contribution are credited to Capital reserve and treated as a part
of Shareholders’ funds.
4.17 Segment reporting:
The Accounting Policies adopted for segment reporting are in conformity with the Accounting Policies
adopted for the Company. Further, inter-segment revenue have been accounted for based on the
transaction price agreed to between segments which are primarily market based. Revenue and expenses
have been identified to segments on the basis of their relationship to the operating activities of the
segment. Revenue and expenses, which related to the Company as a whole and are not allocable to
segments on a reasonable basis, have been included under ‘Unallocated corporate expenses | income.’
4.18 Cash and cash equivalents:
In the cash flow statement, cash and cash equivalents include cash in hand, demand deposits with
banks, other short-term highly liquid investments with original maturities of three months or less.
4.19 Earning per share:
Earning per share (EPS) is calculated by dividing the net profit or loss for the period attributable to
Equity Shareholders by the weighted average number of Equity shares outstanding during the period.
Earnings considered in ascertaining the EPS is the net profit for the period and any attributable tax
thereto for the period.
Notes
to the Consolidated Financial Statements